Altice: Prefer the Credit to the Equity, says BofAML

Per Bank of America Merrill Lynch report published Nov 21:

« Altice shares have lost 50% of their value post results, while the CDS on the holding have increased by 300bps. Management took action with: 1/ the resignation of the CEO and the return of Patrick Drahi to full control of operations, 2/ admission of poor execution in France, now the #1 focus, and 3/ a priority on debt reduction, involving non­core assets and towers disposals. However, ATC also significantly rebased its mid­term expectations on France. Although the steps taken should comfort credit holders, we think the case for the equity is balanced, with long­ term upside on execution, content monetization and domestic consolidation, but unclear valuation support on our reduced forecasts, and a recovery that remains largely dependent on external competitive forces. Unlike Glencore in 2015, we don’t see material value­enhancing options to drive mid­ term outperformance and downgrade to Neutral with a PO of €11. Our credit analyst Nick MacDonald is positive on the credit »